Institutional

A case study in lowering unemployment: The Work Projects Administration

Unemployment rates for many countries are sky high and likely to remain high for some time. In response to the pandemic, many developed countries’ central banks have showered accommodative monetary policy on their respective economies. However, if history is a guide, that is unlikely to have a major impact on lowering unemployment. Instead, fiscal policy can be more impactful on unemployment because it is more direct. As governments around the world debate the next steps of their policy response, this is perhaps a valuable time to examine a case study in reducing unemployment through fiscal spending.

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Fed to purchase corporate bonds through ETFs

On March 23, the U.S. Federal Reserve (Fed) announced its intent to acquire investment grade corporate bonds. The purpose of the communication was to support a market in which sharp price declines were threatening to disrupt the normal functioning of primary (new issue) and secondary market activities. On April 9, the Fed announced an expanded definition of bonds eligible for purchase to include those with investment grade ratings as of March 23, even if they had since been downgraded to high yield, as long as they remain in the BB category.

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5 things to know about Chinese and emerging market stocks

As the world remains in the grip of the coronavirus, we’ve received many questions about the outlook for Chinese and emerging market (EM) stocks – as China was ground zero for the pandemic. First and foremost, we’re asked what the challenges and opportunities are for that country and region?

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Need some good news? Markets, economy do offer some

John Krasinksi of The Office and Jack Ryan fame recently initiated a web series entitled “Some Good News.” It’s a news program devoted entirely to good news. I wish I had thought of that. Since I didn’t, I’m left to borrow the concept. This blog, and subsequent ones in this series, will be devoted entirely to producing lists of good (or less bad) news. After all, as Dwight Schrute says in the episode of “The Office” in which Jim Halpert mockingly takes on Dwight’s persona, “Imitation is the most sincere form of flattery. So, I thank you.”

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U.S.-China tensions could be the biggest risk to U.S. stocks this year

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Seeking value in India, Latin America

Our team joined a webinar with over 800 participants, a significant turnout that was not unexpected given the current market environment.

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Covid-19: Why the “S” in ESG matters

It’s difficult to fathom how much the world has changed within a matter of months. As governments around the globe launched ever more stringent measures to contain – or at least delay – the spread of the novel coronavirus, life as we knew it transformed before our eyes.

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Portfolio managers examine the impact of COVID-19

As the number of COVID-19 cases continues to rise, so do unemployment rates. And so the world continues to look for balance between implementing public health measures, offering fiscal and monetary stimulus, and opening up economies.

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Tactical Asset Allocation Views – May 2020

Our macro regime framework continues to signal that the global economy and all its major regions and countries are in a contraction regime. As widely expected, the economic data are beginning to reflect the disruption caused by quarantines and lockdowns, resulting in a significant deterioration in our leading economic indicators, which we expect to continue for some time. While global market sentiment has stabilized over the past month, it remains in a downward trend, suggesting markets are still expecting downward revisions to global growth expectations. As previously discussed, we believe this macro environment warrants a defensive portfolio posture. We have not made major changes to our asset allocation and continue to favour an overweight exposure in investment grade credit and defensive equity factors.

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Seeking value in emerging markets: China

Our team joined a webinar with over 800 participants, a significant turnout that was not unexpected given the current market environment.
 
As a follow-up to the call, we’ve received numerous questions from participants, with the vast majority pertaining to China. There was also some interest in India, Mexico and Brazil, which we will address in an upcoming blog post.
 
Growing investor interest in emerging markets has been driven by China successfully flattening the COVID-19 transmission curve and being one of the first countries to see signs of a recovery.
 
Conversely, many other countries are still struggling to control the virus, with their economies continuing to deteriorate. These developments make emerging markets potentially more intriguing to investors.

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Low-wage job losses fuel the U.S. stimulus debate

As expected, the U.S. Employment Situation Report for April was abysmal. Unemployment rose dramatically as pandemic lockdown measures were implemented across the U.S., with hospitality and leisure posting the biggest job losses. Amidst all the terrible data, there was one obvious and glaring takeaway: Job losses were concentrated among low-wage workers. In fact, so many lower-paying jobs were lost that wage growth rose markedly, underscoring how hard hit lower-income workers have been by this pandemic.

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Environmental, social and governance (ESG) investing in the era of coronavirus

The unprecedented global response to the coronavirus pandemic has caused a sudden and severe economic slowdown. But not all companies – even within a sector – should be affected to the same degree. And part of that differentiation may be attributable to corporate policies that are recognized in environmental, social and governance (ESG) traits.

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Global Markets: What to watch for in May

One month ago in this blog, I noted that April would be a critical month to gauge the global response to the COVID-19 pandemic. Across the board, it was a massive response, including significant monetary and fiscal stimulus from a variety of economies and widespread lockdowns designed to slow the rate of infection. But as we enter May, we are seeing differences in approach come to the fore – between countries, between localities, and between political parties.

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Why there’s little point in asking whether the stock market will retest lows

To retest or not to retest – that is the question. Indeed, if Hamlet were around today he may be wondering whether the broad U.S. equity market, after posting the second best 25-day rally on record (trailing only 2009’s), will retest the initial market low hit on March 23 of this year.¹ To many investment professionals, a retest of the market bottom is a foregone conclusion. In fact, a poll of financial advisors conducted in early April revealed that 81% expected the U.S. equity market to retest the March 23 low.²

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Video: What to make of the market’s rally amid difficult economic news

It’s hard to imagine the economic data getting worse, and yet the U.S. equity market has posted the second best 20-day rally on record.

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Video: Bank loans’ senior, secured status has helped during crisis

Investors who’ve been rattled by volatility in their fixed income portfolios may be seeking assurance about their underlying holdings.

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As the U.S. passes more stimulus, disagreements loom on what comes next

For months, I have talked about the importance of policy in combatting the COVID 19 crisis: health policy, monetary policy, and fiscal policy. All three prongs need to be adequate and effective in order for the US economy to recovery quickly. While the Federal Reserve has bent over backwards to provide accommodation to support the US economy and markets, fiscal stimulus is still a work in progress.
 
In this week’s commentary I talk with Andy Blocker, Invesco’s Head of US Government Affairs, who breaks down where we are today in terms of fiscal policy – and what to expect next.

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How the shutdown might affect the U.S. economy and markets. (Answers to FAQs)

Our market strategists weigh in on what drove a recent market rally, how the shutdown will affect the economy and markets, and what additional government support may be coming.

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Video: Answers to questions about today’s volatile markets

Recent market volatility has elicited a flurry of questions from advisors and investors alike.

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Long-term investors need to be realistic rather than overly optimistic

The recent market sell-off was most pronounced in lower quality, more economically sensitive areas of the market, such as energy, materials, financials, industrial manufacturing and travel related businesses (i.e., airlines, cruise operators, etc.), which are areas where we find an extremely limited number of investible businesses.

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